Schifferline 15 May 2007

The financial markets remain strong….boding well for the rest of 2007John Ciolino of First Capital Mortgage pointed out in his recent online newsletter there is potentially good news on the horizon….with bonds and home loan rates ending up slightly improved for this past week overall, it bodes well for the second half of 2007.

“First, the Fed’s favorite gauge of consumer inflation, Core Personal Consumption Expenditure Index (PCE), showed a year over year reading of 2.1%, which is very close to the Fed’s target zone of 1 – 2%,” John stated. “Secondly, with inflation moderating, the Fed might start thinking about making a cut to the Fed Funds Rate in the 2nd half of 2007. This tame read on inflation was very good news for Bonds, as the value on their fixed returns get eroded by the impact of inflation.”

In this sophisticated Westside community one doesn’t need to dwell on economic statistics since most of my clients and friends are active investors…but being in the world of selling/buying real estate and working with clients who do need to obtain loans (not everyone pays cash, you know)….how economic conditions affect key real estate financial indicators are extremely important. I feel it’s my job to help you understand how these economic conditions affect your home investment. Your recent credit history can greatly impact the interest rate of the loan you obtain. This is very important for everyone young and old to understand, with the current sub-prime market conditions we are in, lenders are looking a lot harder at a potential borrowers credit history, particularly the most recent before they commit to making a loan.

*********************************************************************************************************************************************The market remains strong….the microclimate at workI continue to be pleasantly surprised at the dynamics of the Westside real estate market. While I work through the Westside communities, my focus has been in Beverly Hills, Bel Air and Brentwood, and as you have seen in past Schiffer Lines I have noted the monthly fluctuations of the median sales prices of homes in these three areas compared with the previous year. In some months, you’ll find ups and downs from one market to the next like we had in March 2007.

This past April, the MLS stats showed the following….Beverly Hills experienced a 14% drop in the median sales price for homes sold in April 2007 vs. April 2006 (March 2007 showed a large increase over the previous year)….Brentwood suffered a 10% drop from April 2007 over last year, but Bel Air experienced a 27% increase in median sales price over April 2006. What this tells you is that when you compared year-to-year overall statistics, the MLS shows that overall, these three Westside communities are up, whereas other areas in Southern California, such as Newport Beach, are seeing sale price declines of as much as 40%. Not here. Some of these stats are impacted by a large number of sales prices that are not being reported, which has impacted the average… To that point, effective May 10 2007, the local MLS will no longer allow the non publishing of sales prices, so we shall soon see a “truer” percentage rate for prices.

Market slowing down? In checking the actual sales of homes in April 2007 vs. a year ago (April 2006) in the three primary markets — Beverly Hills, Brentwood and Beverly Hills — Beverly Hills show a small increase —from 55 homes sold this April vs. 53 last April. Decline in # of homes sold in April 2007 vs. April 2006 occurred in both Brentwood and Bel Air — Brentwood had 86 homes sold last year but only had 78 sold this April….and Bel Air experienced a similar decline from 49 homes sold last April vs. only 37 this past month. As you can see by these fluctuating stats generated by the MLS every month, we continue to see some areas experience increases in sales or prices one month, down the next. Overall, these three communities continue to show strength overall, especially when you consider the downward trends in other areas of Southern California and across the nation.